China would be ‘happy’ to see DR-CAFTA fail

Farmers who are still wondering which side of the DR-CAFTA fence they’re on should consider what may happen if the Dominican Republic-Central American Free Trade Agreement fails to win enough votes for passage, a U.S. trade official says.

Congressional committees were expected to begin DR-CAFTA hearings on June 7 and move the agreement to the House and Senate floors soon after. Reports say the measure is still short of the needed votes, but Allen Johnson, the U.S. Trade Representative’s chief agricultural negotiator, is optimistic it will pass.

He says farmers should consider how China and other U.S. competitors would react if DR-CAFTA is defeated. Although some argue DR-CAFTA would allow transshipment of more of China’s textile and apparel products through CAFTA countries to the United States, Johnson believes the Chinese “would be happier if it failed.”

“When he was here a couple of weeks ago, the president of El Salvador said his country has lost 15,000 to 20,000 textile industry jobs to China,” Ambassador Johnson said. “We believe DR-CAFTA would allow the textile sectors in the CAFTA countries and the United States to keep jobs, and, when that happens, everyone wins.”

Johnson’s comments came during an interview on May 25 when House Agriculture Committee Chairman Bob Goodlatte of Virginia announced he would support the agreement. Georgia Sen. Saxby Chambliss, chairman of the Senate Agriculture Committee, has said he was leaning toward voting against it.

“Currently, U.S. agricultural exports to the six DR-CAFTA countries total $1.7 billion,” Goodlatte said during a press conference with Agriculture Secretary Mike Johanns. “Imports from these countries total $2.4 billion, which not only creates a significant trade deficit, but also puts our producers at a severe disadvantage.”

Goodlatte noted that more than half of U.S. farm exports to these countries will become duty-free immediately. “So it is to the advantage of the American farmer that this trade agreement comes into force so they can have the market access that farmers in these six countries have to the U.S. market.”

Johnson said the Chinese aren’t the only ones who would be pleased if opponents obtain the 218 votes in the House and the 51 votes in the Senate needed to defeat DR-CAFTA.

“During the time period before this administration took office, Canada and Chile and other countries signed a number of bilateral agreements with the CAFTA countries,” Johnson said in a telephone interview with Delta Farm Press. “The previous administration stood by and did nothing while these other countries lined up trade deals.”

Those countries would prefer to continue to enjoy the preferential treatment they now receive under those trade agreements, the ambassador said.

“But those competitors that currently enjoy advantageous positions in this region, whether it’s Canada or Mexico or the European Union, are going to have to realize that we’re now in this region to compete at our advantage rather than at a disadvantageous position,” he said.

Johnson said those who contend DR-CAFTA is NAFTA all over again and not in a good way, are manipulating the numbers to suit their argument.

“I personally think NAFTA was a good treatment,” said Johnson, who wasn’t involved in the North American Free Trade Agreement but helped negotiate most of the agricultural provisions of DR-CAFTA.

“We have seen our agricultural exports to Mexico more than double for soybeans, cotton, beef, pork and rice under NAFTA,” he said. “For commodities like corn, exports are nearly nine times what they were before the agreement.”

DR-CAFTA is different from NAFTA in that the Dominican Republic and the five Central American countries — Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua — have all had duty-free access to U.S. markets since 1999.

The ambassador also disagreed with claims by Rep. Collin Peterson, ranking Democrat on the House Agriculture Committee, that a new Farm Bureau analysis overstates the economic benefits of DR-CAFTA. Peterson said it was “inappropriate” for USDA to accept the $1.5 billion estimate by Farm Bureau, which supports DR-CAFTA, while ignoring a $328 million estimate by the U.S. International Trade Commission.

“The International Trade Commission figures only show the gains for agriculture based on the world in 2005, although I must say that $400 million is still a big gain,” said Johnson. “The Farm Bureau study looks at the world with and without DR-CAFTA and reflects the fact that we now have less trade with those countries than we did 10 years ago.”

Although lobbyists for the business coalition that supports DR-CAFTA have been saying the agreement needs another 30 to 40 votes for passage in the House, Johnson says administration officials are becoming more confident they will prevail.

“Congress deals with thousands of issues and members only focus on specific ones when they’re coming to a vote,” he said. “This is a no-brainer for agriculture, and the more opportunities we have to explain the agreement, the more votes are coming our way.”

President Bush has also become more active in the fight for DR-CAFTA, calling the agreement a national security issue in recent speeches.

“When these countries look to the South, they see Chavez in Venezuela, the influence of Castro from Cuba and the narco-terrorists in Columbia,” he said. “The country of Ecuador just lost its president due to political unrest. The CAFTA countries are saying, ‘We want to be closer to the United States.’”

The biggest fallout from a failure to pass DR-CAFTA, however, would be the message it would send to the rest of the world, according to the ambassador.

“It would say that the United States is willing to step away from its leadership role in world trade, including the ongoing negotiations in the Doha Round of the World Trade Organization,” Johnson said.